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aye - effectively this says that SnowFlake will execute perfectly for 4 years, or slow to 40% growth for 8.5 years and will maintain/reach a healthy margin. Fo
by lumost 5y ago
aye - effectively this says that SnowFlake will execute perfectly for 4 years, or slow to 40% growth for 8.5 years and will maintain/reach a healthy margin. For this, the market is willing to price this performance in today. Meanwhile a dollar placed in the S&P 500 would likely 2x over the same time frame.
To see a return on a dollar placed into snowflake we'd need to start adding in assumptions like "SnowFlake doubles in revenue for the next 7 years reaching a revenue of 76 billion dollars per year in 2029, surpassing GCP, rivaling major cloud vendors".
- onlyrealcuzzo 5y agoWhy? Google's PE isn't going to drop to 13 with NRIRP and its current growth rate.
- lumost 5y agoGoogle has multiple high margin business lines which have grown rapidly for the last 2 decades. Snowflake operates in a specific competitive market, with a yet to be determined profit margin.
- onlyrealcuzzo 5y agoI mean - I agree. But who's to say people aren't willing to bet this as yet to be determined business ends up being the best business of them all?
- lumost 5y agoI mean there will always be a next rocket ship, and it’s obviously clear that people are willing to take this bet. However at the same time, I’d be curious why a lot of money is taking snow as being the next google as a given. My bet is because other institutional investors are taking this as a given, and the time value of capital has been distorted by low interest rates. If this illusion pops before snow hits 10 billion in revenue it’s likely going to cost investors dearly. As of right now a plausible downside of 95% exists should the market choose to take the common valuations of 2016.